The footballing managerial and coaching career of Malcolm Allison, who has died aged 83, is in some sense a cautionary tale. Flamboyance was of the essence: champagne, bunny girls, hyperbolic statements, a rackety domestic life. It led, alas, to ultimate penury – to 20 hours in a police cell, at the age of 72, and a dingy room in an obscure Middlesbrough hotel, a town where he managed, in the early 1980s, one of the many professional clubs that followed his time as a player for West Ham United.

The worst thing that ever happened to him was what, at the time, appeared the best – when, in 1971, he was made manager of Manchester City, after he had been there for six years. With Allison as assistant manager and coach, under the benign aegis of Joe Mercer as manager, City had flourished, winning the Second Division Championship in 1966, the League title in 1968, the FA Cup in 1969, and in 1970 both the European Cup-Winners Cup and the League Cup. Once a star at Everton and Arsenal, and an England wing-half, Mercer was never a great coach – Allison's speciality – nor a major tactician, but he did keep the rain off Allison.

Moreover, he was able to restrain Allison in any possible excesses. But a leading group of City supporters, alarmed at the possibility that Allison might leave were he not made manager, connived to ensure that he stayed. This they achieved by encouraging a director, Frank Johnson, to sell his shares at a colossal profit. The group took over the club and reduced Mercer to general manager, making Allison the man in charge. It was disastrous.

Allison signed the Queens Park Rangers centre-forward Rodney Marsh, like himself a talented maverick from London. Of Marsh's ability there was no doubt, but teams had to be built around him, and City already had a fine, solid one. Acquiring Marsh meant that Allison had to rebuild it, which led to the dropping of the tough, locally born wing-half and captain, Mike Doyle.

Marsh proved, if through no fault of his own, a disruptive influence. Smoking cigars, drinking champagne, predicting, erroneously, that City "would frighten the cowards of Europe" in the European Cup, Allison saw City slip lower and lower. In 1973 he left them for London, his spiritual and temporal home, to spend three years as manager of Crystal Palace. He returned to Maine Road as manager in the 1979-80 season, but the glamour had gone.

Allison blamed his failure on the second occasion to the fact that too many of the players were sated with success. Others felt he got rid of experienced players too quickly. The team was humiliated when, in January 1980, they were knocked out in the third round of the FA Cup by Halifax Town of the Fourth Division. They just avoided relegation, but Allison lost his job the following season.

He had begun to don his famous fedora while at Crystal Palace, deciding to keep it, he said, when the team played a Cup tie at Scarborough in January 1976. Going past the dressing-room, he heard the home players lamenting the fact that just as they thought they had some publicity, Allison and his hat had filched it from them.

Palace, as a Third Division team, had a glorious FA Cup run that season, losing a semi-final to Southampton after beating Leeds, Chelsea and Sunderland away. Allison returned to Palace, too, in 1980-81, but as with Manchester City, this was a dire anticlimax.

In earlier years, his resilience was exceptional. Born in Dartford, Kent, he was a bright schoolboy, and as the son of an electrical engineer, it seemed plain that he would go to grammar school. But, as was so often the case in those days, the local grammar played not soccer – then seen as unfashionable – but rugby. Allison deliberately failed the entrance examination so that he could attend a secondary modern where soccer was played. After spells as a grocery boy and a Fleet Street runner, he joined the minor club Charlton Rovers, and then Charlton Athletic as a centre-half.

There, the writing was on the wall after a brush with the club's manager, Jimmy Seed, which demonstrated Allison's ability to stand up for himself. He was training alone at The Valley, Charlton's stadium, when Seed came past with a visitor, to whom he presented the young Allison. But Allison would have none of it, roundly upbraiding Seed for having never said a word to him in the past.

Thus it was scarcely surprising that in 1951 he moved a few miles north to West Ham, where he found things more congenial, winning a regular place at centre-half. At Upton Park, he met professionals such as the Irish international left-back Noel Cantwell, who were eager to talk tactics with him. So began his interest in coaching, while his elevation to club captain pointed to his single-mindedness.

When he was 29, however, Allison contracted tuberculosis and his playing career was over, with 10 goals in 238 appearances for West Ham. An ensuing operation cost him half a lung. His first wife, Beth, whom he married at 20, believed that "while he was recovering, he decided to prove himself. I think he came to the conclusion that he had one life and he was going to live it to the full."

This, for better or for worse, he did, steadily climbing the ladder as a coach, starting with Bath City in 1963, Toronto City in 1964, and then Plymouth Argyle, till he went to Manchester in 1965. He was back at Plymouth in 1978-79 after a couple of seasons managing the Turkish team Galatasaray, and found success abroad with Sporting Lisbon in 1981-82, guiding them to one of their rare championships, and taking the Portuguese cup as well. After managing Middlesbrough (1982-84), he went to Kuwait, and then to the Portuguese team Vitoria Setubal (1986-88). His time in Portugal came to an end in 1989, when in three months with Farense, he won just one game and was dismissed. On the last day of 1992, he took over at Bristol Rovers, but the following year he was out of work again.

He had four children by Beth, and the marriage lasted 22 years. In 1979 he married Sally-Ann Highley from the Playboy Club, later describing it as "the mistake of my life". He proposed immediately after they had been in a car crash. From this union was born a daughter, Alexis. They split up officially in 1983. Next, for 17 years, came his long-term partner Lynn Salton, with whom he had a daughter, Gina, but by 2000 that relationship too was on the rocks, with Allison trying to smash down the door of her house. Alcoholism and depression took their toll, to the point where he observed: "I don't remember the days any more."

•Malcolm Allison, football manager, born 5 September 1927; died 15 October 2010